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Pharoah Corporation recently announced a bonus plan to reward the manager of its most profitable division. The three divisional managers are to decide which performance
Pharoah Corporation recently announced a bonus plan to reward the manager of its most profitable division. The three divisional managers are to decide which performance measure will be used to evaluate profitability. Pharoah Corporation requires a 10% minimum return on investment. The following information is available for the year just ended. Divisional Operating Income Divisional Operating Assets Division Invested Capital Ashton $850,000 $89,250 $195,000 Drye 770,000 84,700 65,000 Poole 475,000 54,625 115,000 (b) Calculate residual income. (If the amount is negative then enter with a negative sign preceding the number, e.g. -5,125 or parentheses, e.g. (5,125).) Residual Income $ Ashton $ Drye $ Poole Which division performed the best? Poole hat Pharoah Corporation's weighted average cost of capital is 8% and its tax rate is 20%. Calculate economic value added. Ashton it is negative then enter with a negative sign preceding the number, e.g.-5,125 or parentheses, e.g. (5,125).) Drye Economic Value Added $ Ashton $ Drye $ Poole
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